With a presidential election currently underway, cryptocurrency investors are thinking about who the eventual winner will be and their impact the overall industry. Perhaps a more accommodative White House can be a boon for digital assets.
Investors don't need to search far and wide to find a place to park their capital. I predict that one top cryptocurrency is set to soar, thanks not only to potential changes to the regulatory landscape, but also for other reasons. Here's a closer look.
Near-term catalysts
The crypto that's up 63% already this year (as of Oct. 28), but that I believe will continue soaring, is none other than Bitcoin (BTC 0.10%). This is the world's most valuable blockchain network, by far, with a market cap that exceeds $1.3 trillion today.
Bitcoin has had some catalysts that recently have worked in its favor and some that could help out in the near term. I mentioned the regulatory landscape earlier. Former President and Republican nominee Donald Trump was the keynote speaker at the Bitcoin Conference in Nashville, Tennessee, in July and said that if elected, he would establish a Bitcoin strategic reserve for the U.S.
This paves the way for the government of the world's biggest economy to start pushing forward legislation that benefits Bitcoin, which could be a boon for the crypto's price and adoption. Individuals and institutions will be less afraid to buy and hold it.
In April, Bitcoin underwent a halving, cutting its new supply growth rate in half. Historically, in the roughly 12- to 18-month period after a halving, Bitcoin's price has experienced an impressive bull run that has driven its price to new highs. We're six months into this cycle, so the next year could see big upside.
In January, the Securities and Exchange Commission finally approved Bitcoin spot exchange-traded funds (ETFs). These investment vehicles essentially legitimized Bitcoin on both Wall Street and Washington. They have made it incredibly easy for investors to gain exposure to Bitcoin's price action without needing to figure out custody solutions.
Last month, the Federal Reserve cut its benchmark interest rate for the first time since the start of the COVID-19 pandemic, which struck in the first half of 2020. Lower rates help to boost consumer borrowing and spending and business investment. And for investors, they can spur more risk-seeking behavior to earn higher returns, which could push more capital to Bitcoin.
CRYPTO: BTC
Key Data Points
Owning a scarce asset
After learning about those four major catalysts (regulation, halving, ETFs, and lower rates), it's very difficult not to be bullish on Bitcoin as we look ahead. This digital asset has near-term developments working in its favor. However, I also believe investors have reason to believe Bitcoin can soar over the long term, say the next decade or more.
What makes this asset unique is that it's absolutely finite. There will only ever be 21 million coins in circulation. The previously mentioned halving events enforce Bitcoin's pre-determined supply growth rate. Owning a scarce asset can be extremely compelling for investors.
Here's where Bitcoin outshines fiat currencies, most notably the U.S. dollar. The world's reserve currency has seen its purchasing power plummet in the past century due to the government constantly printing more money to fund its troubling fiscal deficits and service its gargantuan debt load. The money supply as measured by M1, which includes all the cash and money in checking accounts, totals $18.2 trillion today. That's up more than sixfold from $2.9 trillion just 10 years ago. This trend, which leads to dollar devaluation, is unlikely to reverse.
Investors looking to own a decentralized asset that isn't controlled by anyone and isn't prone to being constantly debased could find themselves buying and owning Bitcoin.
